Simply Money

Episode Transcript

(00:06):
To Night our take on a claimthat your portfolio will not beat inflation over
the next decade. We're listening toSimple Money, presented by all Worth Financial.
I mean, me Wagner, alongwith Steve Ruby. Steve. This
is something I think that maybe peopledon't even think about. Right. It's
like you're investing, you're making money, and you're not ever really thinking on
a regular basis about how inflation iscutting into that amount. And one of

(00:29):
the segments that we do a lotis kind of retirement fact or fiction.
And you know, I think there'sjust a lot of untrue information that people
tend to make future plans with theirmoney around, and one of them is,
first of all, how much moneyyou're going to make in the market,
and second of all, how muchthat's going to outpace inflation. Yeah.
I mean lately the past couple ofyears, people have been thinking a

(00:51):
little bit more about inflation than historically. Than our faces, it is right
in our faces, but still it'snot something that people think about long term
in their portfolios. Oftentime. Theythink, all right, I'm retired,
I don't need to take any riskanymore. But really, when you don't
take any risk, your portfolio issuffering from what's called inflation risk or purchasing
power risk, which means you losethe value of money over time. About
every twenty two years of value thedollar gets chopped in half. So people

(01:15):
think and some have realistic expectations ofwhat kind of returns they can anticipate,
you know, when they are investing. And that's what was highlighted from a
study that showed up an article inmarket Watch, and it's a little bit
alarmist. It says, forget aboutyour retirement portfolio beating inflation over the next
ten years. And it's based onsupposedly a global survey in twenty twenty three

(01:41):
that found US investors on average,believe that their portfolio will out do inflation
by fifteen point six percent annualized overthe long run. That is one heck
of a reach. So to beclear, we're not even saying that investors
are thinking they're going to get afifteen point six percent. We're trying,
and we're saying above the inflation rate, right, I don't know, so

(02:04):
if the goal is two percent,they're thinking are seventeen point six percent?
We know we're not even at thegoal. So they're projecting what an eighteen
point six plus, you know returnon those investments. I do remember when
I was in my early twenties,you know, and had just intermittently started
to put a little bit of moneyinto a form and K was looking at
the returns and someone in passing throughoutwell, you know, I was like,

(02:28):
oh, this is great, youknow whatever, I'm getting ten twelve
percent right now. And they werelike, yeah, but what are you
getting after inflation and taxes? AndI was like, what, don't rain
on my parade? Yeah, don'task me those questions. You don't want
to think about that. But that'swhat we do right as financial planners.
We are saying, okay, realistically, what return can you expect to get?
What return can you live off ofin the future, when we're also

(02:53):
accounting for the fact that inflation willcontinue to increase and that's you know,
tax will also take a part ofthis pie. Well, when we look
back at the truth of what's actuallyhappened in the markets, when we compare
what's expected apparently fifteen point six percentafter inflation, what's actually happened in the
history of the markets is the returnshave beaten inflation by six point one percent

(03:16):
on an annualized basis. So thisis data from Santa Clara University. I
think, you know, I've seenthis figure in plenty of other places too,
that that is more realistic. Butthe author of this market Watch article
believes that even that number is nowtoo high. Well, he's even saying
he's projecting that when you factor ininflation, you'll actually be and the negative

(03:42):
in the future. Listen, thisis our job to cut apart these headlines
and to try to bring what webelieve is truth. And the truth that
we bring is usually based on alot of things, but a lot of
historical context. You know, there'sno historical context that says this now.
I do think that there are maybesome factors pointing to the fact that the
historical returns that we've all grown toknow and love over time, you know,

(04:05):
might be we might need to bea little more conservative. But this
man does not have a crystal ball. There is no way to know where
the market is going to go inthe future. And I need to look
back no further than December and Januaryof this year, when people were making
all kinds of predictions about the FederalReserve cutting interest rates six times this year,

(04:26):
Right, that was what they werepredicting. Well, let's see we
are in July now and we haveseen NARIA rates cuts. Yeah, so
what do people know? That's theshort Yeah, how do you know this?
But this guy he justifies it,saying his belief are that equities are
currently overvalued. In bonds below averagereal returns make it clear that ultimately we

(04:49):
need to prepare for below average returns. This is just what I would call
a perma bear some of the things. The markets are already always going to
go down, and that's quite simplynot the case. It's the opposite of
that. The markets go up overthe long term, but we do see
bumps and volatility along the way.This guy that wrote this article that highlights
the study also blames us financial advisors. He says that we're supposed to help

(05:12):
investors be realistic about retirement planning,but some of us are too optimistic,
saying that you can expect nine percentrate to return annualized. Now, that
is a huge generalization that I takepersonally because that's not what we do.
And when I build financial plans,when other fooduciary financial planners build financial plans
with the folks that they work with. We are oftentimes stress testing the heck

(05:33):
out of those financial plans. Weare assuming longevity, We're assuming that you're
going to live longer than you everthink you're going to live. We're assuming
high inflation rates, so we backout different financial goals. Different buckets of
money have different inflation rates. You'rehousing, utilities, groceries, gas as
it stands right now, you knowwe're using three percent. For healthcare,

(05:56):
we're using four point seven percent.It has a higher inflation rate for college
savings, almost six and a halfseven percent. So we do take into
consideration higher inflation figures for different financialgoals, and then I stress test the
plan based on assumed lower returns.So we look at longevity, we look
at high inflation, we look atyou probably spending more money, and we
look at even taxes and how futureincreases and taxes could impact your portfolio.

(06:23):
So and this guy blames us,no, thank you. Yeah. Our
goal is to make sure that yourplan is bulletproof, right that we can
throw it up against the wall onethousand different ways with a thousand different scenarios
of high inflation, low returns,all the worst things that you can possibly
have and if that plan still stands, then we say, okay, this

(06:44):
is something we can live with.You're listening to Simply Money, presented by
all Worth Financial Immi Wagner along withSteve Ruby, as we talk about the
fact that inflation, yes, itwill in fact take a cut of the
returns that you are getting in yourinvestments to you di. I have a
good friend who was recently running allkinds of spreadsheets and Excel to figure out
if they could retire early right ontheir sort of timeline, and as he's

(07:10):
talking through all of the variables thatI hate to do this, I'm like,
you know, I don't want tobe like the retirement squasher here,
But I was like, did youthink about inflation? And he was like,
well, no, I mean Idon't think it's going to make a
big difference. You want to retireby the time you're fifty, you could
likely be in retirement for forty fiveyears. Think about what the purchasing power
of a singer dollar will do inthat amount of time. You have to

(07:35):
you have to bake in inflation.That is our job as fiduciaries. And
so if this is something that youhave never taken into account. This is
your wake up call. This issomething you absolutely need to be thinking through
when you are trying to figure outcan I retire? Can I meet my
financial goals? Is this feasible?Yeah? And separate from that is just

(07:56):
the investments in and of themselves.Because a financial plan writes the prescription for
your money. It helps us understandthe risk you need to take that you
can afford to take. Getting toknow you and doing some questionnaires shines light
on your tolerance and you combine thatall together to find the sweet spot for
your acid allocation. Your stock tobond ratio, stocks, your own shares
of a company. The company doeswell, your portfolio does well. Bonds

(08:18):
are like holding an IOU for acompany or a government or your municipality,
and they give you interest back.So if stocks are doing well, bonds
are you know, if stocks aredoing poorly, that as bonds are supposed
to keep your portfolio float. Andthis guy is painting a picture of low
returns, But over what type ofacid allocation? Over what types of investments?
Because they're small cap, mid cap, large cap, international, domestic,

(08:43):
the international stock app obviously plays apart in our portfolios because it doesn't
necessarily correlate with what's happening domestically.So when when you're painting a picture of
long term returns, not keeping upwith the market, not keeping up with
inflations, come on, based onwhat you know? What my question is
for this dude, I want tosay, Okay, if you were saying,

(09:03):
well, it's not equities, it'snot bonds, it's not this,
what is your solution, then whatdo you suggest that people be investing exactly?
Yeah, do you have an insurancelicense? Is this where we're going?
You know? I mean really,if we were to dig really deeply
into this that I'm sure that thisman does have an angle on why he
is saying this. You know,many times when markets are down, people

(09:26):
start to second guess should I beinvested in the markets? In? The
answer many times is Tina, thereis no alternative. When you look back
historically, you can say real estate. Right, people think real estate because
oh, you can touch it,you can feel it. People definitely needed
But when you look back historically,real estate has barely barely outpaced inflation in

(09:48):
the US over the last one hundredyears. Right, people throw out gold.
You look at gold, that's notthe answer. Bonds certainly not the
answer. It's the markets and whatyou have to understand. Yes, you
definitely need to be thinking through inflation. You need to understand that healthcare will
inflate at a much higher rate whenyou are planning. But what you are
betting on when you are invested inthe stock market is corporate greed. That

(10:13):
these companies will continue time and timeagain to find ways to make money.
They are built this way, theyare incentivized this way. This is how
the system works, right. Wesaw it during the pandemic. You weren't
going to bars anymore. They weren'tselling liquor. What did they do.
They didn't shut their doors. Theypivoted. They use that alcohol to make
hand sanitizer. They will find waysto make money. Do not bet against

(10:37):
this American economy that is built onthe back of corporate greed. Just like
financial planning will find ways to growyour net worth over time, because it's
not just your investments, it's taxplanning, it's insurance planning, it's a
state planning. So sitting down andhaving that financial plan understand the type of
risk you need to take to keepup with inflation over the long run is
the play here, and I'm gladyou actually made that point about tax planning

(11:01):
because that's a huge part of thisright, how do you keep more money
in your pocket? We have seenpeople make mistakes right, not do tax
planning well, and it cost themtens of thousands of dollars. On the
flip side, you get it rightand you're saving tens of thousands of dollars
in some cases in your pocket.So it is so comprehensive. Yes,
you need to think about inflation,but there are many angles that you can

(11:22):
attack this problem with. Here's theall Worth advice history shows a solid financial
plan with a highly diversified portfolio isgoing to beat inflation over the long term.
Coming up next, a bunch ofgen xers just hit an important milestone.
We're going to talk about what thatis. Plus how high will the
S and P five hundred go nextyear? We'll look at the latest lofty

(11:43):
claim. Next. You're listening toSimply Money presented by all Worth Financial here
in fifty five KRC the talk station. You're listening to your Simply Money presented
by all Worth Financial. I mean, wag you're along with Dee Ruby.
If you can't listen to our showevery night. You don't have to miss
the thing. We have a dailypodcast for you. Just search simply Money
on the iHeart app or wherever youget your podcasts. Coming up at six

(12:07):
forty three, we're looking at away to boost that Social Security check.
Right, there's all kinds of strategies. How do you get it right?
You know, it's time to talkabout the generation that is on deck for
retirement, right if you have enoughmoney to do it? My generation,
right, we're talking gen X.And it's funny because I was like looking
at this earlier today' Seve and Iwas like thinking, like, wait,

(12:28):
what are we retiring? We ownenough for the oldest gen xers to be
retiring. No, we're probably notthere yet. But here's the milestone that
gen xers are hitting. The oldestgen xers are now arriving at the age
of fifty nine and a half,when they can begin to tap those deferred

(12:50):
right, those retirement assets that youweren't supposed to touch and not get a
penalty. And I think there's justa lot to think about for gen Xers
and retirement that's different than first ofall the generations that have come afore us
and those that come after us,well, the generations that come before gen
xers, baby boomer, boommeers andprior, they have the three legged stool.

(13:11):
They have pensions. It's a generalization, but a lot of them have
pensions, a lot of them havesocial security, a lot of them have
investment portfolios. Gen Xers, Iwould argue that many do not actually have
that pension. So there isn't thatthree legged stool making decisions much much more

(13:31):
important and needing to be precise.I would say that there's certainly some interesting
things happening. Though. When wetalk about gen xers, the older ones
turning fifty nine and a half,that does mean that you're at the point
where your early withdrawal penalty goes awayfrom four oh one K and IRA assets.
It also opens the door to beingable to roll oftentimes money out of

(13:54):
your four oh one K to investinto a rollover IRA and have more options
or higher a fiduciary financial planner tobegin investing that for you and building that
financial plan. You know, Ispeak to schools, parents and schools from
time to time about technology, andI say, you know what the hard

(14:15):
thing about us as parents right nowis we did not grow up with these
devices. Yet we are raising childrenwho are they'll know better how to deal
with these devices because they will havegrown up with them themselves. But it's
a whole new territory for us.Gen Xers are the generation that did not
grow up with a pension. Rightto your point, we don't get a
pension, many of us when weretire. Yet we are also the first

(14:37):
ones to have for one ks andto know how to use them Wisely,
the generations that come after us fouroh one K will be the only thing
they've ever known, you know,and so hopefully they will learn you've got
to get that company match, you'vegot to understand how you're invested. Target
date funds maybe aren't the best thinglong term, but for gen xers,

(14:58):
you know, your parents had apension, so you've got to figure these
things out on your own. Andthat's why I think, gosh, it's
a tough generation to be and whenit comes to retirement, it's a good
point because you're looking at the otherside, or you're looking at the younger
generations and they have more experience withwith technology and Nuerro one K auto enrollments
and maybe some of the tools andeducation options that are available within their four

(15:18):
to one K plan providers that shinelight on you know, some really high,
really high level you know, thirtythousand foot glimpse that you know,
do you have the right investment mix, are you saving enough? And well
they're coming up with parents then right, like if you know, future generations
will also be able to talk totheir kids about four to one ks because
that's what they had, right youknow, I guess my dad did end

(15:41):
up having a four to one K, but his dad had a pension,
you know, so at some pointthere's a generational shift here. You become
the first one that had a fourto one K and you need to be
figuring it out on your own.You can help the generations that come after
you, but when Gen X atlarge is the generation that is the first
to really deal with this, youknow, you got to get a right.
Yeah, that's a great point,and you know you also need to

(16:03):
brace for impact. As far aslife throwing you curveballs. We don't know
about our ability to continue to workeven if we have the desire to do
so. So making sure that you'rekeeping your job skills fresh and understanding what
employers need to make yourself marketable inthe event that something does happen and we
need to continue working because we're notready to retire if life throws us one

(16:25):
of those curve balls. Another thingis getting ready for understanding some of the
complexities behind medicare and if we dopull the trigger on retiring early. This
is not a new trend. Thisis stuff that everybody needs to know about.
But we're at the point where genxers are getting closer to that timeframe
making sure that if you're retiring early, how do we close that gap between
early retirement and sixty five when we'reeligible for medicare. I think this generation

(16:52):
for gen X financial planning becomes almostcritical. Right for maybe generations before you
could get by on your and youwere going to be okay, you know,
figuring out that floural one K.And I'm going to ask you this
because I'm sure your probably experience hasbeen the same as me. But I
find that it's pretty often that someonecomes into my office and their plan for

(17:12):
retirement is just to continue working.Okay, I'm going to work until I'm
seven, I'm gonna work until I'mseventy five. I love what I do
I'll do it to the day Idie, and I think the disconnect there
is many times it's just not anoption. You could get sick, someone
you care about get sick, yourboss fight gets sick of you, or
your boss could change you know.I mean, you may love your job

(17:33):
right now, and Monday morning youwake up and there's a brand new software,
your job description has changed somewhat,You've got a new boss, and
all of a sudden you don't wantto work another day. You hate it?
Yeah, and do you have theability to continue working? Continuing to
work is not a financial plan.You need to make sure that you've reached
some level of financial freedom so thatin the event that you can't work,
you're still able to support yourself andput yourself in a position where your money

(17:57):
lasts longer than you do, whilestill maintaining some kind of standard of living.
That's a tenet of financial planning.And that's what you're talking about.
Needing a lot of gen xers needinga partner with financial advisors to make sure
that they actually have a plan asopposed to I'm going to keep working and
or I'm now fifty nine and ahalf and so I don't have to keep

(18:18):
working because I can tap my retirementassets without that ten percent penalty. Yeah,
my money's going to last thirty fiveyears exactly, right. Do you
understand how long you could likely bein retirement? Do you understand that you're
still five and a half years awayfrom medicare covering those healthcare expenses? What
is your plan for healthcare? Whichcan be incredibly expensive when you are funding

(18:41):
it on your own right, Sothere's so many things. So, yeah,
this fifty nine and a half.For the older members of gen X,
yes you can tap these accounts,but what we would say is don't
write if at all possible. Ifyou do not love your job and you're
looking at that this is an option, we look around. You may not
need a job that has the samekind of paycheck coming in as you do

(19:03):
now, but maybe it's just,hey, can you get by for a
few years without tapping the assets sothat they can continue to grow what you've
invested and you have some kind ofpaycheck coming in, right, So I'm
just the caution for older gen xersis, yes, you've reached a milestone.
Should you do anything about it?Absolutely not, No other than sitting

(19:23):
down and building a financial plan becauselife can throw your curve balls and some
data that I've seen it's interesting becausethere's something called the Sandwich generation and as
you get older, you could fallento a point where you're maybe taking care
of aging parents and still have childrenon the payroll. So you need to
think about how to plan for that. Here's the all Worth advice if you
are a gen xer, Please,if you're thinking about going this alone,

(19:45):
consider a fiduciary financial advisor, justto make sure your house is truly in
order. Coming up next, asummertime update on the local housing market.
You're listening to Simply Money presented byall Worth Financial here in fifty five KRC
the talk station. You're listening toSimply Money presented by all Worth Financial Imami

(20:07):
Wagner along with Steve Ruby. Thesummer months are usually when the real estate
market is in full swing. RightPeople are moving, they're trying to get
settled, maybe in that new homebefore the next school year starts. But
as we know, over the pastfew years, the real estate market has
been anything but normal. So joiningus tonight with an update on what's really
going on locally right here in Cincinnati, area is a real estate expert,

(20:30):
Michelle Sloan, owner of Remax Time, and of course you can catch her
show right here in fifty five kr. S Sloan sells homes every Sunday.
Michelle update us, where are thingsspending this month? Well, we've got
a little bit of good news,bad news, all kinds of news today
to share. And I'm excited aboutit because we'll start with what's the good

(20:52):
news? And the market statistics areshowing that we have more active inventory,
which is a great news for buyers. Our inventory is up about thirty percent
from last year, so that's allgood. The one thing that sellers like
to hear is that the median salesprice is also up about five percent year

(21:18):
over year. So the average mediumthe median sales price in Cincinnati is now
three hundred thousand dollars, So we'vesort of hit that threshold because we've been
in the two eighties to eighty fivefor a really long time. So now
the median sales price is three hundredthousand. Again, good for sellers,

(21:38):
maybe not so good for buyers.And that leads me to housing affordability,
and frankly, that's where the troublebegins, because we are seeing numbers.
If home prices are up forty sevenpercent, then they were in early twenty

(21:59):
twenty. Can you imagine just infour years the price of your home could
increase more than forty percent. Thatis just outrageous, okers it is.
And so that media and sales pricenationwide is five times more than the household
income, more than people are bringingin. So there's definitely a disparity in

(22:22):
the numbers. It just doesn't workfor a lot of people, and that's
so frustrating, especially for buyers whoreally really want to settle down, they
want to buy a home. Theyknow the importance of buying a home because
it will it helps build wealth whenyou own property. So Michell, let's
start there. What is your advice? And I've said this many times over

(22:45):
the past several months, what isyour advice to first time home buyers?
I feel really terrible for them.You've got interest rates high, You've got
the average price of even entering themarket and you know, being able to
you know how much higher than itwas just a few years ago. So
what do you what's your advice tofirst time home buyers? You know,

(23:06):
basically you need to planning, planning, planning is so important, making sure
that you have a good credit score, making sure that you are saving as
much money as you can, andjust being just saying you need to save
money when people are living paycheck topaycheck is really really difficult. I mean,
my own daughter has that issue rightnow. Is because just like mom,

(23:29):
I can't save any money. Ihave two hundred dollars in my bank
account. I'm living paycheck to paycheck. How do young people go about saving
money? But you know, that'sreally the key, because I've had a
buyer that I just talked to nottoo long ago. The lender said,
well, you need to have atleast ten thousand dollars in your bank account

(23:52):
in order to buy a home,even if you're not planning to put that
much down. If you're only puttingfive percent down, and we're trying to
find a home for one hundred andtwenty thousand dollars, which is really difficult.
In all of Cincinnati, there areabout a dozen homes under five or
under one hundred thousand dollars, andthey're not in the greatest of conditions.

(24:14):
So for buyers, you know,I have to say, my heart goes
out to you, but do yourbest to save your money, keep your
credit score as high as possible,and then when it comes to the big
things in your life that you wantto do, maybe you do have to
put off that vacation or a lotof people who are getting married today they

(24:37):
have a house fund and they putmoney into it instead of gifts that they
may or may not use. That'ssmart. People are actually asking for cash
so that they can have a downpayment. So there are creative ways of
going about doing it. It justit takes time and a lot of people
it maybe till you're in your thirtiesuntil you can actually afford to buy a

(25:00):
home. But if you can doit now, now is best because it's
only going to get more difficult inthe future. You're listening to Simply Money,
presented by all Worth financially made Wagneralong with Steve Ruby, as we
are joined by Michelle Sloan, ourreal estate expert, talking about how really
tough it is for first time homebuyers. Michelle, is your advice different

(25:21):
for those who are buying a homethat aren't first time home buyers or is
it really the same If you alreadyown a home, you most likely have
built up equity in that property.Most likely you are sitting on some cash
that you can use to buy thenext home. But here's again the challenge.
You have to understand how much ofthat money is liquid. Are you

(25:45):
able to use that money to buywithout selling? Do you have to sell
first before you can buy? Andagain, you have to look at all
of the scenarios. So when you'retalking to a real estate agent, you're
talking talking to a lender, youneed to run through all of the different
scenarios. We need a plan A, we need a plan B. In

(26:07):
a perfect world, if you owna home today and you want to buy
a home, you want to buyfirst and then sell if you can afford
to do that. Now, backin two thousand and eight, two thousand
and nine, that was something thatburnt people really bad. Yeah, and
they ended up holding two mortgages fora long time, and that was ugly

(26:29):
for so many peoples. And they'vedone that, and so many people are
scarred by that that they don't evenwant to think about it. But it
is the solution today anyway. Andso then what's your advice to sellers,
I mean, anything different that you'reseeing over the summer that you would have
been said differently, maybe last fallor over the winter. No sellers,

(26:51):
Honestly, I do think that buyersbecause of the restrictions on buyers, the
higher mortgage rates. Right now,mortgage rates are up a little bit from
last week, so mortgage rates arefluctuating. They're under seven percent for most
people, but you know, sixpoint eight percent something like that. It
depends on your credit. But knowingthat those rates are going to be more

(27:15):
difficult, there are fewer buyers thatit can afford to buy a home today
than they could have just a coupleof years ago. For sellers, you
do have to go ahead and getyour home ready. You have to do
the staging you have to do.You want your home in great condition so
that it will sell for the highestprice possible. And just from a timeline

(27:36):
perspective, Michelle, you know,if you're getting ready to buy a house,
like, what should you expect?Is it the same as a dollar
has been Does it take longer?Is it a shorter process? Yeah,
it does take a little bit longer. We are seeing more and more people,
especially first time home buyers. Itcould take a year or more to
find a home. If you haveall of the means, you have the

(27:59):
credit, you have savings. Bestcase scenario, we can find you something
within six months. But you justhave to be in it for the long
haul because this is something that isgoing to take some time. And if
you're selling your home. It's interestingbecause the statistics show that we are still
only about seven days on the marketbefore a home will sell, wow,

(28:22):
which is really really short. ButI'm seeing as we're moving into July and
August those I think that timeframe isgoing to just be pulled out a little
bit longer. So I think itmay take a couple of weeks if you're
priced right. There's so many factors, so make sure you're talking with an
experienced real estate agent to help youthrough that process. Great advice, as

(28:44):
always from a real estate expert.Michelle Sloan from Sloan Sells Homes and Remax
time. You're listening to Simply Moneypresented by all Worth Financial. Here in
fifty five KRC the talk station.You're listening to Simply Money and presented by
all Worth Financial. I mean meWagner along with Stevie. We do you
have a financial question you want usto answer? There's a red button.

(29:07):
You can click them while you're listeningto the show. It's right there on
the iHeart app. Record your questionand it's coming straight to us straight ahead.
Should you buy an SUV and ev? What about a hybrid? Right?
One of these things is selling likehotcakes right now. We'll tell you
about it. Does it make senseto you? When it comes to Social
Security? This is one of themost misunderstood, you know, programs that

(29:32):
has ever been It's done by thegovernment. There's lots of red tape.
There's a lot to understand. Andthe reason why you got to really try
to figure it out is because ifyou get it wrong, if you claim
Social Security at the wrong age,you could be leaving tens of thousands of
dollars on the table. And keepin mind, this is the program you've
been paying in your entire working life. So we would say it's very important

(29:55):
that you get this right. Yeah, and there's an article on Baron's recently
that said how to boost your SocialSecurity check by twenty four percent that highlights
supposedly and under the radar option that'sworth considering that that fidelity shines some light
on and this is a file andsuspend, so Let's be clear here,
because there was the Congress cracked downon the spousal file and suspend option where

(30:22):
this closed back in twenty fifteen,where a couple was allowed to collect benefits
from their spouse while their own benefitsaccrued to become larger and then they switched
to their own. Obviously, thatwas a heck of a loophole that a
lot of people took advantage of toget more money from Social Security. And
if you see this article, youmight think file and suspend, I can
do that still, but that's notaccurate. This is something different. Yeah,

(30:45):
And what this is is essentially youdo get a one time redo.
So say you turn sixty two andyou decide you want to go ahead in
file for Social Security. That's whatyou always planned on doing, and then
all of a sudden, this greatnew job opportunity comes down the road ode
and you want to take it,and you don't want that benefit to be
affected by the fact that you're goingto have a paycheck coming in. Well,

(31:06):
what do you do, You've alreadyclaimed social Security. Well, there
is a one time redo opportunity whereif you have been getting if this is
within like the first year, thatyou have claimed Social Security and nine months
in you decide I no longer wantto claim. Then you can suspend that
it's claim I, and you canwait until full retirement age. Here's the

(31:27):
deal, though, all of themoney that has been paid to you to
this point you have to pay back, right. So for a lot of
people it sounds like maybe a greatoption. But if you don't have that
money sitting there and some of it'salready spent, it may not be such
a great option. So this headline, I think is very, very misleading.
Yeah, that's exactly what I wasgonna say. It's misleading because it

(31:48):
makes it sound like it's what usedto exist, which was a massive benefit
where you could grow your own benefits, your spouse collects on yours and then
switches to their owns. It wasa really big deal. It was a
huge way to pull more money outof Social Security that was obviously closed because
of the challenges that Social Security isfacing down the road. So what this
is is not what it sounds like. It's more of an oopsie do over

(32:12):
where you know, I tested thewaters. I don't actually need to collect
I'm sixty two. I was alittle bit over zealous. I thought I
needed it, I went back towork. Now I don't want to be
taxed and on that much my socialSecurity benefits, so I can I can
suspend my own and then file ata later time in the future. So
let's do this in very broad strokes, right, because understanding that everybody's situation

(32:36):
is very, very different, veryindividual. Let's just start by talking through
who does it make sense to claimat sixty two when it's the first day
possible that you can claim social Security? Right? What are the pros and
cons of claiming as early as youpossibly can. I think that this is
a good way to look at it, because I would rather just get it
right the first time than need tofile and suspend, you know, sitting

(32:58):
down building that financial plan, understandingyour own situation, your own needs and
goals, your own needs for cashflow, your own health situation, because
that's a big part of it.Collecting at sixty two could be because you
know, unfortunately, you have someinsight into our own longevity, and collecting
sooner rather than later means that we'regetting some of that money back that we
wouldn't if we deferred. For example, there is also a school of thought

(33:22):
that exists where it's kind of theopposite of waiting until seventy to get the
most money that you could ever get, because there's a break even point.
If you live until your late seventiesand you defer until seventy, you maximize
your social security. Eventually you're goingto get more money back from social Security
than you ever could. But thatother school thought the opposite is if you

(33:44):
don't really need social Security, ifyour financial plan is robust, if you
have a pension, rental income,passive income, your expenses are low enough,
you have enough portfolio assets that socialSecurity doesn't really move the needle.
Then there is the argument of collectingas soon as you possibly can in case
there are issues in the future withSocial Security, which many people do see

(34:08):
on the horizon, because in orderfor those issues to go away, both
sides of the eye would have tocome together to fix social Security. And
I would say the one caveat thereis I'm not a big fan of making
a decision about your money based onwhat could or couldn't happen. Right there's
twenty thirty four is when we knowthe Social Security Trust Fund could run out.

(34:30):
That's a lot of time for Congressto do something about it. We
know we will wait to the eleventhhour. But yeah, then there's full
retirement age. You know, fora lot of people that makes sense waiting
until full retirement age to maximize yourbenefit. And then I know others and
this is you know, not alot of them, but some who look
at seventy and if you can holdoff until seventy, it's a guaranteed eight
percent every year that you're going toget. So for those who really need

(34:52):
the money writer, who are lookingto maximize that benefit that they're getting,
if you have other means of makingit to that could also make a lot
of sense. Here's the all Worthadvice. When and how to take Social
Security is a huge decision. Weencourage you to meet with your trusted financial
advisor to help you figure out whatage is right for you. Coming up

(35:13):
next, what's the best car tospend your money on? A hybrid an
electric vehicle, good old gas.We'll look at a recent trend. Next.
You're listening to Simply Money presented byall Worth Financial. Here on fifty
five krs the talk station. You'relistening to Simply Money presented by all Worth
Financial. AMMI Wagner along with SteveRuby. You know, it's a question

(35:35):
for a lot of people. There'smore and more options it used to be.
I don't know, njol I wantan suv or a four door sedan?
Do I want a truck? Well, how it's Do I want an
electric vehicle? Do I want ahybrid? Do I want a car that
still takes gas? And I think, you know, people are thinking about
things a little differently than maybe theywere in the past. Yeah, so
a lot of people are turning toyour hybrid vehicles rather than just electric.

(35:59):
And one of the big problems hereis with electric It's not with electric cars
themselves, it's the infrastructure that existsin the United States is kind of lacking.
While it had developed quickly, it'sgrown fifty five percent since twenty twenty
Loan twenty twenty one. That is, it continues to disappoint many electronic vehicle
drivers, myself included. Actually,I do have an electronic vehicle, mostly

(36:23):
because it's a ton of fun.These things are fast, it is a
blast to drive. I'm sure itsaves money. I guess for me it's
local because you know, I dida trip to Cleveland over to Cedar Point
Toledo and then down to Cincinnati,and it was a nightmare. It was
awful. I will never do itagain until that infrastructure exists, because it

(36:46):
didn't and where the car told meto go, it took me to places
that it said it was going totake forty five minutes to charge, but
instead it was a day and Ihad my kid with us and it was
just ridiculous. So having it aroundtown tons of fun. But we still
have our gas vehicle and that's theway I like it at this point in
time. So I'm kind of oneof these people. We're next car,

(37:07):
maybe a hybrid, because that's whatthe trend is leaning towards. Until that
infrastructure exists. I think you're right, and we actually have electric vehicle too,
and we would also need to alwayshave one that takes gas, at
least a hybrid. And I thinkthere's like kind of the fantasy of electric
vehicles, right. You love theconcept of I'm just charging them and not
needing gas, and you know theimpact that that has on the economy.

(37:28):
There's a lot of reasons why peoplechoose electric vehicles. You think about the
Super Bowl, A lot of thosecommercials are these amazing cars and these electric
vehicles until to your point, youtry to drive one more than you got
a couple of hours from home,and then you realize, Okay, I'm
sitting at this charging station for halfhour, and you know, so to
even get to Nashville, you've gotto stop maybe once or twice, and

(37:49):
that four four and a half hours, and it's like, does that even
make sense? And I think whatmany you're realizing now is kind of the
compromise here. The happy medium isthese hybrid vehicles, and now so many
more people are interested in buying hybrids, and the data supports that because then
on average, it takes dealers abouttwenty nine days to sell hybrid, seventy
four days to sell an electric vehicle, in fifty three days to sell the

(38:13):
gas power traditional vehicle. So itis certainly in the data that shows that
until infrastructure improves, you need tohave realistic expectations. If you think that
you want to buy an electric vehicle, well, I mean, and to
your point, there's a serving outthere that says that a lot of people
who currently own electric vehicles say theywould consider a hybrid or gas vehicle in
the future. We're just not thereyet, so a lot to think through

(38:35):
and thanks for listening tonight. Wehope you're going to tune in tomorrow.
We're talking about the most common issuesof financial advisor finds the first time they
sit down with the client. You'vebeen listening to Simply Money, presented by
all Worth Financial here in fifty fivekrs the talk station